China growth fears in focus
Market focus was on HSBC’s flash estimate of its China July purchasing managing index (PMI). In June, the HSBC PMI fell to a nine-month low of 48.2, slipping further below the 50-mark that divides expanding activity in the sector from a contraction.
Analysts said the July number may remain below the 50-level for a second consecutive month after last month’s rise in money market rates triggered a liquidity crunch and reduced the amount of credit available to manufacturers.
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A weak number may fuel speculation that Beijing could take stimulus measures to boost a slowing economy. Tuesday’s remarks by Chinese president Xi Jinping and Premier Li Keqiang sparked hopes of easing measures by the People’s Bank of China (PBOC). Xi emphasized the government’s determination to restructure the economy while Li was reported saying that Beijing would not allow gross domestic product (GDP) to fall below 7 percent.
“We believe that China will announce new stimulus measures soon – modest and targeted ones but sufficient for growth to achieve this year’s 7.5 percent goal. The worst the PMI, the bigger the measures would be,” wrote analysts at Credit Agricole in a morning note.
Sydney up 0.4%
Australia’s benchmark index crossed the 5,030 mark to hit its highest levels since May 24 thanks to a rally in resources. Atlas Iron added 7 percent after reporting a 25 percent increase in fiscal year 2013 iron ore shipments while Rio Tinto rallied 2 percent and BHP Billiton rose 1.3 percent.
The Australian dollar hovered around $0.9295 ahead of the HSBC China PMI. The Aussie dollar is sensitive to data from China, Australia’s biggest trading partner, and could come under selling pressure if the manufacturing survey disappoints.
Investors also await second-quarter domestic inflation data, which is seen as a key factor for whether the Reserve Bank of Australia’s eases monetary policy again. In its last policy statement, the central bank said a stagnating inflation outlook could support the case for more stimulus.
“Since the rate cut in May this year, more and more dovish analysts have been crying foul that the RBA has started to jawbone again because inflation is stagnating and the non-mining economy is drowning,” wrote Evan Lucas, market strategist at IG in a note.
Nikkei down 0.4%
Japanese stocks pulled back as the yen continued to trade on the stronger side of the 100-level against the dollar. A stronger currency weighs on exporter stocks as it reduces the value of their repatriated earnings. Market heavyweights Softbank, Fast Retailing and Fanuc were lower by over 1 percent each.
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Also weighing on sentiment was weaker-than-expected June trade data. Exports rose for a fourth straight month in June, up 7.4 percent from a year earlier but missed market expectations for a 10.3 percent gain.
Apple suppliers Japan Aviation Electronics jumped 1 percent following better-than-expected earnings from the Cupertino giant.
Chip-equipment maker Advantest tanked 3.5 percent after the Nikkei newspaper reported that its operating loss is expected to widen to $30 million for the April-June quarter.
Kospi flat
South Korea’s benchmark index crossed the 1,900 level for a second straight session as domestic exporters benefited from the yen’s strength. Automaker Hyundai Motor added half a percent in early trade.
Apple component suppliers also rose, with memory chip makers LG Display, SK Hynix and display maker Samsung SDI higher by over 1 percent each.
Meanwhile, tech giant LG Electronics jumped 2 percent ahead of posting second-quarter results later in the day.
— By CNBC.com’s Nyshka Chandran. Follow her on Twitter @NyshkaCNBC
Source Article from http://www.cnbc.com/id/100908514
